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About Michael J. Miller

Miller, who was editor-in-chief of PC Magazine from 1991 to 2005, authors this blog for PC Magazine to share his thoughts on PC-related products. No investment advice is offered in this blog. All duties are disclaimed. Miller works separately for a private investment firm which may at any time invest in companies whose products are discussed in this blog, and no disclosure of securities transactions will be made.

GoingGreen Panelists Optimistic on GreenTech, Solar

At the AlwaysOn GoingGreen conference this morning, I heard a number of start-up companies and their financers give a very optimistic view about how "greentech" was improving and would get competitive with traditional forms of energy. But I was most taken by the number of people who weren't focusing on solar, or wind, or biofuels, but on less sexy energy efficiency projects and products. I was worried about the concerns about subsidies and investment in the U.S. compared with the rest of the world.

Kevin Surace, CEO of Serious Materials started the day by talking
about what makes a great company. He spent a lot of his talk explaining
how his company found and identified a problem, created good technology,
and found the right people and the right target market. Serious
Materials makes windows and glass solutions that offer better
insulation, and he proudly pointed out a project to retrofit the 6,514
windows at the Empire State Building.

He said people don't buy products because they are green -- only when
you can demonstrate a Return on Investment. He said changing the Empire
State Building's glass from dual-pane windows to the company's R8 glass
had a three year ROI.

Evolution of Green

In a panel of investors talking about "the evolution of green," several of the participants talked about supporting companies that specialize in energy efficiency, such as those that provide more efficient windows, more efficient heating and air conditioning systems, or LED lighting. Kevin Genieser of Morgan Stanley noted that the cheapest energy is the energy that is never used; so efficiency programs make good business sense.

Anup Jacob of Virgin Green Fund talked about the need for efficiency and specifically talked about water usage, while Marc van den Berg of Vantage Point Venture Partners talked about the opportunity for LED technology replacing vacuum tubes as a source of light - with things like dimming augmented by spectrum control. He said that the market looks to him like semiconductors did in 1981.

Many panelists talked about how they were investing in other countries as well -- both because of the opportunities to bring technology to poorer societies (such as in India and Africa), and because many foreign countries, such as China, offer more support to emerging greentech companies. Van den Berg said that in U.S., you need to assume your company won't get help from the federal government, but you might get help overseas. On the other hand, Kevin Genieser of Morgan Stanley said, while he would like to see carbon legislation, many companies have gotten some support from the Department of Energy for things like loan guarantees -- which has helped.

Virgin's Anup Jacob said he was more worried about operating expenses, such as direct subsidies, than capital expenses, which are more often supported by things like loan guarantees. Marc van den Berg said he believed the U.S. will move to a broader group of feedstocks for energy.

Morgan Stanley's Genieser said that while he worried about incentives, he was encouraged by the falling price of renewable energy, particularly by seeing new technologies head closer to "grid parity" (where it would cost as much as traditional power sources) as a whole system -- including things like energy storage.

There was a good discussion about whether the Silicon Valley had the right environment for greentech startups, with Atluru talking about how the Valley had the management expertise, but that most of these companies need real expertise in more specific technologies and in specific areas, such as building generation plants.

State of Cleantech Industry

Ira Ehrenpreis of Technology Partners, a big "cleantech" investor, said that cleantech investing was now 15 percent to 20 percent of venture investing, as opposed to when it was only 1 percent to 2 percent when he started. He said that's because of several reasons, ranging from more sector-focused to more government-supported. He too said he was worried that the Chinese government was spending much more on greentech than the U.S. government.

He said the issue wasn't renewable energy replacing traditional energy, because the need for energy continues to grow every year - and that by itself is a $1 trillion opportunity.

Solar Solution

In a panel on solar energy, Tom Tiller, CEO of Abound Solar, talked about how solar is a very competitive market. Reyad Fezzani of BP talked about how things like bigger solar farms are bringing in longer-term investors, and as a result, such investments are making more sense. As far as making solar competitive with traditional energy, he asked, "Are we there yet?" He answered that overall, we were, but only if you looked at the overall system. Anand Kamannavar of Applied Ventures made a similar point, saying that while the cost of solar was initially still quite higher, it was coming down -- heading towards $2 a watt.

Much of the discussion was about government subsidies -- mostly in other countries -- that have driven much of the demand for solar systems. Fezzani talked about how changing incentives provided by each government worried him as a supplier, but even without them in the U.S., solar was getting more popular. "We've lit the fuse and it's now going to take off," he said.

He said it wasn't a matter of subsidies for solar, but rather catching up with the subsidies - direct or indirect -- for other forms of energy. Kammanavar mentioned that things like carrier groups in the Middle East could be considered as subsidies. He said he worried that the U.S. government was investing in R&D, but less so for actual installations, and said he was worried that other countries were leveraging off of the R&D innovation. Fezzani later responded that there was real innovation happening in China as well.

Tiller talked about the difficulty of getting government loan guarantees, and said it requires a viable business plan, but that such loan guarantees were very helpful. He said, in the long run, it was technology that would differentiate the solar providers, and said he thought the market price would have to eventually get to under $1 a watt.

Kammanavar said innovation was happening all over the world, not just in the U.S., and specifically noted about projects in Australia and China.

The panelists were very optimistic about the future of solar. Tiller said costs were coming down and demand will grow very quickly, faster than most forecasts. Fezzani said he expected China would be bigger first, but the U.S. would catch up.

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